Silicon Valley payments firm Stripe is flush with cash. Last week, the San Francisco-based company announced a $245-million round that catapulted its valuation to $20 billion, making it the ninth most valuable startup in the world, according to PitchBook Data.
But for the company, much like its Silicon Valley peers WeWork, SpaceX and Palantir, capital is much less a need than it is a bonus. An IPO listing? Maybe later.
“We didn’t have to raise this round,” said Stripe co-founder and CEO Patrick Collison. “We decided to raise this round because when we looked at the growth opportunity in front of us, the changes in the markets we’re serving today, and the markets that we’d like to serve ahead, we were faced with a choice. Do we proceed ahead with this judiciously and carefully? Or do we jam the throttles and go full speed ahead?”
For Stripe, the opportunity is clear. It’s in Southeast Asia.
The fintech unicorn estimates that an additional 500 million people across Southeast Asia and India will move online in the three years, presenting it with an opportunity to capture large swathes of unbanked and mobile savvy customers. Stripe already boasts some big names among its customers in the region – Grab, Carousell and honestbee. Globally, that roster includes Spotify, Google, Salesforce and Microsoft.
But getting ahead means Stripe still has to crack one big obstacle in Southeast Asia’s fintech scene – fragmentation.
Southeast Asia comprises 11 different markets each with their own unique sets of regulations, industry players and behaviours. New e-wallets are launched every other day by financial and non-financial players. Transaction costs are high, fraudulent transactions are rampant, and cash in most parts of the region is still king.
“If you’re a startup in New York or San Francisco, it’s easy for you to expand to the entirety of the US and Canada. If you launch in Germany, you can readily expand into the entirety of the EU. But the inter-country transaction costs in Southeast Asia are holding the tech ecosystem back, and we hear it very viscerally from companies. It’s visible in the macro stats because the transactions aren’t happening. So, there’s a problem to be solved here,” said Collison.
Getting a share of Southeast Asia will require more than a little local adaption of Stripe’s existing products. The company is opening an engineering hub that will build completely new products out of Singapore, including core parts of API and underlying infrastructure. These made-in-Singapore products will be used not just for Southeast Asia, but the rest of the world.
“We plan to make serious, sizeable investments not only in the next 10 years but especially in the next two. Every round in some sense represents a trajectory change, and we’re very pleased with this growth and we see the opportunity to kick it up a notch again,” said Collison.
Until then, Collison says, IPO plans will be on hold until further notice.
“We’re so focused on the enormous gulfs of opportunities in front of us. How do we serve these customer needs? How do we keep up with these rapidly growing customers with such vast global ambitions? All this pulls us here. Until things have calmed down somewhat, I’ll give a different answer to that question,” said Collison.